Michael Salvaris (1/6) correctly criticises Premier Kennett's argument that the main purpose of privatisation is to reduce state debt. But he exhibits a failure to understand that the real object of privatisation is to improve the efficient functioning of the economy, so adding to living standards.
That is why, as shown by recent World Bank research, there have now been some 15,000 privatisations of state-owned enterprises worldwide (most since 1990). Most clear-cut success stories come from high or middle-income countries.
That research also shows that it is not simply a matter of establishing a competitive market structure, as proposed under the Hilmer reforms; there are also important benefits from private ownership.
Mr Salvaris accuses the Kennett Government of pursuing privatisation for ideological reasons. Yet in the same breath he displays an ideological fixation with maintaining a structure of government which has clearly been shown to have operated inefficiently and at considerable cost to the Victorian community.
The latest Bureau of Industry Economics analysis of the electricity industry, for example, shows that Victoria has had the worst performer among the states. Grants Commission data shows the same picture for public transport.
There should be nothing sacrosanct about any particular level of government and proposals for changes should be judged on their merit, drawing inter alia on the expenditure of other countries.
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